The Unprecedented, Explosive Demand for POS Terminals in India

Indian Prime Minister Modi’s plan to bring the country’s commercial economy into the twenty-first century by encouraging the adoption of digital payment methods is well under way. And as a result, the demand for POS terminals in the world’s second most populous nation is at an unprecedented high.

The surge in demand for POS terminals skyrocketed immediately following the move. Verifone, which commands a 45% market share in the country’s POS terminal market, experienced its highest growth ever in the country in the month after Modi’s announcement, with orders for its terminals increasing five-fold. According to one report, banks are expected to add another 1,000,000 POS devices by the end of March, 2017, which is fast approaching.

An Unprecedented Opportunity

There are many benefits to be had when a country embraces digital commerce channels. In addition to the ease of use for the consumer, digital money benefits the government since it is more easily traced and taxable. As well, merchant fees on POS terminals result in a lot of profit for state-owned banks.

But the initial adjustment period can result in a temporary economic slump if physical currency is removed and the digital solutions to replace it aren’t present to the extent that they need to be. According to officials at the finance ministry, the number of POS machines across the country would need to increase by a factor of 10 from the current 1.4 million devices to ensure that the economy experiences growth even in the face of dwindling physical currency.

Speaking back in 2015, R. Gandhi, the Deputy Governor of the Reserve Bank of India, predicted that even more digital payment solutions were needed in order to bring India in line with other emerging plastic economies like Brazil and Russia, particularly in rural areas. “The proliferation of digital channels is evident mostly in the Tier-I and Tier-II centres of the country. Digital channels must be available in Tier-III to Tier-VI centres as well,” he said. “Some estimates indicate that to reach the average levels of BRIC countries, India will need 20 million POS terminals as against the current 1.2 million. This is a tall order.”

If India is able to successfully navigate this change and open up the digital banking sector to more rural areas, the payment infrastructure industry will experience explosive growth. In 2015, the Indian POS terminal market was worth INR 2.15 billion, and based on a recent analysis by international research firm Frost & Sullivan, it is set to grow to INR 3.86 billion by 2022, aided partly by Modi’s new policies.

Challenges and Considerations

Despite all of these incentives and projections, there are many hurdles India will have to overcome before it can join digital commerce behemoths like the U.S. and China, chief among them being the vast mismatch between supply and demand. Here are some statistics to put that mismatch into perspective:

At the time of Modi’s announcement, there were about 1.4 million POS devices in the country, compared to 15 million retail merchant establishments and 36 million small to medium enterprises.

To meet the growing demand, many of India’s banks have been turning directly to POS manufacturers such as Verifone and Ingenico to place bulk orders from their factories in China. But the wait time to have these orders fulfilled can be anywhere between three to six weeks.

At Firemane, we can fulfil bulk orders for POS terminals quickly and efficiently, without the headache of manufacturer lead times. That is what makes us a POS terminal provider of choice in India and other emerging global POS terminal markets. Curious to learn more? Contact us today.

The road ahead for India as it transitions from a primarily cash-based economy to a plastic one will not be quick or easy. But merchants and POS resellers who jump on board the digital commerce train now will reap the most rewards.